Nxera Pharma Co., Ltd. (4565) March 25, 2026 Annual General Meeting Transcript

Good morning, ladies and gentlemen. My name is Christopher Gargill, Representative Executive Officer, President and CEO. Thank you very much for taking the time out of your busy schedules to attend today's meeting. In accordance with Article 15, Paragraph 1 of the Articles of Incorporation, I will serve as the Chair of this meeting, and I respectfully ask for your cooperation. I hereby declare the 36th Ordinary General Meeting of Shareholders of Nexera Pharma Company Limited open. For the smoother conduct of the meeting in Japanese, Executive Officer Nomura will facilitate the proceedings at my designation as chair. Mr. Nomura, please proceed. I am Nomura Executive Officer. Based on the Chair's designation, I will serve as moderator of today's meeting. As previously announced, this meeting is being live-streamed via the Internet for shareholders. While we will not film shareholders attending in person, please understand that any remarks made during the meeting will be broadcast. We kindly request that you refrain from stating your name when speaking. For shareholders viewing online, please note that video or audio disruptions may occur due to network conditions, computer settings, heavy access traffic, or other factors. In addition, we respectively request that all shareholders refrain from photographing, recording, audio recording, or saving any part of this meeting. We will take questions and comments from attendees collectively after all reports and explanations of the proposals have been completed. When asking a question or making a comment, please speak from the nearest standing microphone. Should an unfold event, such as an earthquake, occur during the proceedings, please remain calm and follow the instructions of our staff. The matters to be addressed at today's general meeting are as stated in the notice of convocation provided on our company website. In accordance with applicable laws and our Articles of Incorporation, printed materials have not been sent. A summary will be projected on the screen at the front later, so please refer to it. You may also view the notice convocation on our company website using your smartphone or other device. Next, I will report the number of shareholders in attendance and the number of voting rights they hold. Out of a total of 25,623 shareholders, the number of shareholders entitled to exercise voting rights at this AGM is 23,160. The total number of voting rights is 904,371. Including shareholders attending today, as well as those who exercise their voting rights via Internet or by mail, The total number of shareholders represented is 13,863, and the total number of voting rights represented is 640,132. Next. Since we are meeting the quorum, I would like to report that. Next, I will report the results of the audit conducted by the Audit Committee. The audit results are as stated in the audit report of the Audit Committee on page 80 of the Notice of Convocation provided on our company website. The Audit Committee conducted an audit of the execution of duties by the directors and executive officers for the 36th fiscal year from January 1 to December 31, 2025. The results of the audit are as follows. Thank you. The business report and its supplementary schedules are recognized as properly prepared in accordance with applicable laws, regulations, and articles of incorporation, and as accurately represent the status of the company. No fraudulent acts or material facts in violation of laws, regulations, or the articles of incorporation were found in relation to execution of duties of the directors and executive officers. The resolutions of the board directors regarding the internal control system are deemed appropriate. The description in the business report concerning the internal control system as well as the execution of duties by the directors and executive officers have no matters required comment. With respect to the consolidated financial statements, the non-consolidated financial statements, and the respective supplementary schedules, EY, are considered appropriate. That concludes the report. Thank you for your attention.

Thank you. Shareholders attending in person are asked to view the screen at the front of the venue. Shareholders participating online are asked to view the broadcast screen on your device. Questions will be taken collectively after the reports and explanations of the proposals.

Thank you.

My name is Chris Cargill. I am the CEO of Nexera Farmer. Thank you for being here. And I have a lot to share with you today. Now, I want to begin by addressing our share price. Your frustration is legitimate, and it is shared by every member of our leadership team, including me, personally. I'm not here to make excuses. I'm here to explain what we have been building beneath it. And to show you, concretely, why I believe the next chapter looks very different. We have a clear focus, we have a sound strategy, and we have the capital and patience to execute it. This is not the first time Nexera has been in this position. The chart on the left shows our share price between 2011 and 2014. It looked very similar to today. The shareholders who held through that period were rewarded. By 2016, the share price had risen more than 10 times from its lowest point. We know what an investment cycle looks like. We have navigated one before. In our 2030 vision, revenue above 50 billion yen, operating profit margins above 30%, remain unchanged. I want to address directly why we have reported losses. These are not accidental losses. There was a deliberate cost of building something valuable. Look at the green bars on the right. Each year, our research and development investment has grown. This represents investments in new medicines and our drug discovery platform. Every yen of these reported losses was matched by new investments in Nexera's future. A farmer does not call the seed a loss. They call it the beginning. This investment phase is now changing. In FY2026, we expect to reach core operating profitability. The direction has changed. The returns phase is beginning. In 2022, we had a very solid base from which to build from. We made a deliberate choice. Products, platform, programs, and partners. These are not four separate businesses. Each one was designed to fund, de-risk, and strengthen the others. Now, let me show you what we are building. More products for patients in Japan and Asia Pacific. More data to enable the AI drug discovery revolution. More programs in the largest areas of global unmet medical need. And more partners, with 10 programs now advancing through global clinical development. Japan is our home. It is our number one market and our number one patient priority. The Japanese pharmaceutical market is worth $76 billion. We have built our commercial foundation here in Japan first, in specialty medicines, in rare diseases, and soon, pediatric care. And we are beginning to expand that foundation across the Asia-Pacific region. Three years ago, our Japan revenue was zero. In FY2025, our revenue in Japan reached 17.8 billion yen. That is growth of 27.5% in one year. Now, let me show you how we did it. PIVLAS is a treatment for a dangerous condition affecting the brain's blood vessels after a hemorrhage. It now holds 74% of its market in Japan. Cuvivic is our treatment for insomnia. We launched it in December 2024 with our partner, Shionogi. Sales grew 224% in FY 2025. And we just added a third product, Vomoralone, a medicine for children living with Duchenne muscular dystrophy. And I want to tell you more about that. This is Dr. Vasantha Gouda. She is a specialist children's neurologist at Evelina London Children's Hospital. Some of her patients are now being treated with femoralone, and I would like you to hear directly from her. Dr. Garda, welcome to our offices in London. Could you please kindly introduce yourself and tell us a little bit about the work that you do for patients with Duchenne muscular dystrophy?

Thank you. It's a pleasure to be here. I am one of the paediatric neuromuscular consultants based at Villeneuve London Children's Hospital. I'm also an honorary senior lecturer at King's College Hospital. We have about 120 Duchenne muscular dystrophy patients. under our care at our center.

Can you provide an overview of Duchenne muscular dystrophy for us, please?

Duchenne muscular dystrophy is a progressive condition, which is inherited through the X chromosome. About 1 in 3,500 male birds are affected by this condition. What happens is, due to your quality... Dystrophin gene, the protein dystrophin is not produced in enough amounts, or if it's produced, it is not functional. And this dystrophin protein acts as a scaffolding to the muscle cells. So if there is not enough dystrophin protein or if the dystrophin protein that is present is faulty, the muscle cells break down over time. Affected boys lose their ability to walk. And then in the second and third decade, they develop heart and breathing muscle problems. And all this results in premature death.

What does the current treatment pathway look like?

We have had conventional corticosteroids as the gold standard for a few decades now. We have long-term data that show... However, there are significant side effects as well. Common ones are significant weight gain and the cushion guide appearance, growth stunting, bone health could be affected with vertebral fractures, delayed puberty, and so on. So for new parents, it could be quite daunting comparing the benefits, which are significant. Versus the side effects, which are also quite significant, therefore, newer drugs such as Vemoralone, which provide an alternative to conventional corticosteroids, open up further opportunities to families who are sceptical about starting conventional corticosteroids.

There's been multiple clinical trials with Vemoralone to date. Can you summarise some of the clinical data that has been generated with this MERS?

Mammarulone is also a steroid. This is what we call a dissociative steroid. With the data that we have, it has a better profile when we consider growth stunting, which is not seen with Mammarulone. The bone health as well as the vertebral fracture incidence, which is much, much less with Vemoralone. There is emerging data that the behavioural side effect profile is slightly better with Vemoralone as well. Daily Vemoralone and daily prednisolone deftosocard have a similar efficacy profile. We started prescribing Vemoralone for our patients from April 2025. So far, we have had 12 patients either start Memoralone or switch to Memoralone, but the numbers are likely to increase over the next few years.

And how do you think Memoralone will make a difference for patients and families in Japan?

New drugs like remoralone provide an opportunity to reduce disparity. Approval of new drugs for rare diseases such as tissue muscular dystrophy varies. And by staring at this process and enabling the patients and families to access newer drugs with fewer side effects would help them a great deal.

This is why we do this work. There are more than 2,000 children and families in Japan living with Duchenne muscular dystrophy. We hope to bring Vemoraline to them. Duchenne muscular dystrophy is rare. It's progressive, and today, incurable. It weakens the muscles over time, leading to loss of mobility, heart problems, and a shortened life. Until now, the only treatment in Japan was corticosteroids, medicines that work but cause serious side effects in growing children. Remoralin works differently. It targets the same receptors, but with a gentler effect and fewer side effects. It is already approved in the US, Europe, the UK, and China, and we are proud to bring it here to Japan. Now, I want to show you the engine behind our future program pipeline. Artificial intelligence is changing how medicines are discovered. It's not a prediction. It's already happening. But there is an important point that many people miss. When every company uses the same public training data, the results converge. The real advantage comes from the proprietary data that you train the AI on. We have spent more than 15 years building a unique scientific data set, 493 protein structures, 59 biological targets studied in detail, 30,000 measurement points, and more than 100 active projects. No other GPCR-focused company in the world has this specific data set. It cannot be bought, and it cannot be copied, and that is our advantage. We are building what we call the AI plus Q platform. This combines artificial intelligence with quantum-level simulation technology. In plain terms, it allows us to predict how a potential medicine may interact with the GPCR in the body before we even make a single molecule in the laboratory. This makes discovery faster, more precise, and less costly. We have invested $5 million in our London Discovery Centre to build this capability. We chose London as the base, given its excellent access to world-leading data science talent for AI drug discovery. Google DeepMind and Isomorphic Labs, developers of AlphaFold, and large language model companies such as Anthropic, OpenAI, and Meta all have large operations in London, which enhances the local talent pool. Our new AI PlusQ platform is expected to activate by the end of 2026. This slide shows what our AI PlusQ platform does at a molecular level. We can simulate, in precise detail, how a drug candidate interacts with its target inside the body. The AI PlusQ platform is currently in beta development. The first programs generated entirely by this platform are expected in 2027. This is the sprout that will become a significant flower. I now want to show you something that our current share price does not reflect at all. This is our pipeline of new medicines in development. On the left, our neurology programs, already partnered with Uricren and Stessa. And on the right, What comes next? We are now discovering medicines in metabolic disease and rare endocrine disorders. These are conditions where today's treatment options are mostly limited to chronic injectable therapies, a burden for patients. This slide shows the six new programs we are advancing and the estimated size of the global market for each one. The combined market for these programs is estimated at more than US$220 billion by 2030. One billion patients seeking better tolerated, more convenient treatments. The value of this pipeline in our share price today is approximately zero. We believe that will change. There is strong strategic logic to selecting these targets. They are highly synergistic. The Metabolic programs will combine to drive 10% weight loss or more, placebo-like tolerability, and muscle preservation. The future of chronic weight management. Patients and payers want oral therapies. And clinical endpoints for these programs are biomarker-driven, enabling speed and capital efficiency. This slide shows the three clinical stage programs that we have earmarked for new partnerships. The EP4 agonist program, NXE744, has demonstrated early efficacy signals in an indomethacin challenge study. With the GPR52 agonist, NXE149, we've run imaging studies that suggest it has effects in brain regions similar to other approved antipsychotic drugs. And the EP4 antagonist program, NXE732, showed early efficacy signals, including two partial responses, and continues its Phase 2A study with Cancer Research UK. Active discussions are ongoing, and we expect new licensing transactions in 2026. I want to explain how the world's most rigorous pharmaceutical companies view us. Neurochrine Biosciences, Eli Lilly. AbbVie, Centessa Pharmaceuticals. These companies choose their partners carefully. When a company of that scale signs an agreement with us, it means our science has passed their highest level of review. Our partnership with Neurocrin alone has a total potential value of $2.6 billion. Our partnerships with Lilly and AbbVie add a further $2 billion in potential value. These partners provide an important source of non-dilutive capital for Nexera. They offer our science a global reach from a Japanese base. As I said at the beginning, we are not the first company to go through a period of trading where we are undervalued. Both Amazon's and Apple's share prices fell over 80% between 1999 and 2001, and both recovered. This is what investors call the J-curve, and this is where we are on that curve. The dot marked we are here, that is today. The investment phase is largely behind us, and we are at the inflection point. The returns phase lies ahead. Short-term sacrifice, long-term value creation. That is the thesis, and we are executing it. Let me be specific about what the near-term future looks like financially. In FY2025, our revenue was 29.6 billion yen, and we held 20.4 billion yen in cash. In FY2026, we expect a revenue of 33.8 billion yen, and a core operating profit of 7.8 billion yen. Breakeven is in sight. We have also made significant changes to our cost structure. Since 2023, we have reduced our global headcount by over 30%. Multiple pipeline programs with low probabilities of success have been culled. We are spending and allocating shareholder capital as if it were our own money. Because it is. This is the Nexera Leadership Team. Every leader you see here holds shares in this company. When the share price is low, we feel it personally. When the value is created, we share in it alongside you. Our interests are aligned with yours. I do not ask you to trust words. I ask you to watch the milestones. In 2026, we expect to submit QVVT for approval in Taiwan. We expect clinical data and milestones from multiple partnered programs, including Neurocrin and Centessa. We expect the first development candidate from our metabolic pipeline. And we expect to launch our AI plus Q drug discovery platform. In 2027, we expect approval and launch of Kivivik in South Korea, and with our newest product, Vemoralone, we've already commenced our preparations for engaging with the PMDA, as we plan to bring this very important medicine to patients in Japan as soon as possible. We expect top-line Phase 3 data for Direclidine, our lead partnered program with Neurocrin. And we expect multiple more development candidates to come through the metabolic and rare endocrine disease pipeline. And we expect the AI plus Q platform to start rapidly generating optimized lead programs. Each of these milestones is a sprout becoming a bud. Each one moves us closer to the harvest. More products, more data, more programs, more partners. The flywheel is turning. The next chapter of Nexera is not yet written, but the foundation is laid. The strategy is clear. The team is ready. We've planted the seeds that others could not see. And today I'm showing you the first sprouts. We will not stop until you see the harvest. Thank you. Thank you very much.

Thank you very much. We have now explained the matters to be reported in our business outlook going forward through the video presentation. Next, we will proceed with the proposal. The details of the proposal are stated in the notice of convocation provided on our company website. I will now explain the proposal election of seven directors. All eight current directors will complete their terms of office at the conclusion of this general meeting. Accordingly, based on the resolution of the nomination committee, we propose the election of seven directors. The director nominees are Christopher Cargill, David Roblin, Rolf Soderstrom, Eiko Tomita, Naoko Shimura, Nicola Rapson, Takeo Moroka. Total of seven nominees. The career summaries and other details of each nominee are stated in the Notice of Convocation. We will now invite the candidates for the external directors to share their aspirations. Please note that when speeches are made in English, that will be followed by Japanese interpretation. We would like to first of all hear from Director David.

Good morning, fellow shareholders. My name is David Roblin. I'm a medical doctor, and I've been practicing in research and development for new medicines for 30 years, and I've had the privilege and honor of developing 11 medicines in my career to date with Pfizer, Bayer, and in biotech. I serve because I wish to transform patients' lives through the medicines that I've been involved with, and I remain honoured to be an independent, non-executive director of our company, Nexera. I'm confident that we are on a journey together based on a sound strategy to deliver value. Value for patience. In the Japan and Asia-Pacific region, and it is important that we can already see the benefits of our medicines to patients in that region. Value through our R&D activities, our best-in-class strategy that the CEO described, our new AI platform allows us to keep pace with the competition. And our business development partnerships with big pharmaceutical companies. And third, value to shareholders in the way in which our company is valued. I remain confident. You all know that the R&D process takes time. There are challenges in that process, but success leads to massive rewards. Rewards for patients. And rewards for shareholders. I remain confident and I thank you for your votes for me as a non-executive director.

Thank you very much, Director David. Now, moving on to Director Wolf.

Good morning. My name is Rolf Soderstrom, and I'm honoured to be a director of Nexera. I've worked for over 20 years in biotechnology, building successful companies, and have helped bring several medicines to both commercial and clinical success. I'm very excited by the opportunity. of Nexera, and believe that the strategy will deliver both a unique and valuable company to Japan. The investments we have made over the past few years are building a very strong foundation on which to build the next phase of Nexera's growth. I am honoured and remain very dedicated to supporting Maxera over this next phase, and I would like to thank all shareholders for their continued support. Thank you.

Thank you very much, Director Rolf. Now I would like to ask Director Tomita to say three words. My name is Eiko Tomita. Very nice to meet you. For the past 30 years or more, I've been working for pharmaceutical companies, including Bristol-Myers Quibb and AstraZeneca. I was involved in R&D of drugs and also regulatory affairs and also decision-making of such companies. Based on those experiences, I would like to make contributions to an extra pharma business. I'm very honored. As was explained in the presentation video, there are various programs that have already started, and the company is also working to utilize the scheme of drug discovery using AI. So, we are now facing the new phase. So, I would like to... I hope to continue to capture the opportunities and to make sure that we reduce risks, and I'm hoping that I will be able to make contributions to the development of this company. Thank you. Director Tomita, thank you very much. Now Director Nicola, please.

Thank you. I am Nicola Rabson. I am a senior partner at Linklater's, one of the world's largest law firms. I specialize in dealing with corporate employment and governance matters. In that capacity, I work alongside some of the world's largest and most successful companies, including Nomura and Mitsubishi. I have held numerous executive positions within Linklater's and am a non-executive director of a FTSE business. I am truly privileged to be involved in this next phase of Nexera. I believe in this company, its vision, and its prospects. On a personal note, I was diagnosed with lupus as a young woman and have personally benefited from the discovery of drugs during my lifetime. I am committed to being part of the journey, and I look forward to the future and our collective success.

Thank you.

Thank you very much, Director Nicola. Now, Director Shimura, please. My name is Naoko Shimura. Very nice to meet you. On page 8 of the Convocation Notice, there's skill matrix. What is expected of me is legal affairs and compliance, according to my understanding. I would like to make sure I have the courage to be hated by other members of the company. And at the same time, I would like to make contributions to make this company the very first Japanese leading international biotech company. I would like to make sure that I would not de-accelerate the company's growth. I'm very much looking forward to working with all of you. Thank you. Director Shimura, thank you very much. Last but not least, I would like to ask Mr. Takeo Morooka to say a few words. My name is Takeo Morooka. I've been trained as plastic and reconstructive surgeon in the emergency medicine, and after that I worked for WHO and also for the Ministry of Health and Welfare of Japan. I have been focusing on the Japanese market, and through healthcare policymaking and so on, I would like to make sure I can make contributions to the development of the company. Thank you very much. Mr. Marocca, thank you very much. This concludes the explanation of the proposal. Now, we would like to proceed to the vote. CFO Nomura, please. We will now appreciate the vote on the proposal, Election of Seven Directors. The details of this proposal are as being explained. Those in favor of this proposal, please indicate your approval by applause. Thank you very much. As a result of the vote just taken, including voting rights exercised via the Internet and by mail, we have received approval from a majority of the voting rights of shareholders present. The proposal is therefore approved and passed as proposed. Thank you very much. This concludes all matters to be addressed at this Annual General Meeting of Shareholders. This concludes the 36th Annual General Meeting of Shareholders of Nexterra Pharma Company Limited. Thank you very much. Directors and executive officers, please stand. Once again, thank you very much for your attendance today. To further enhance our corporate value, we will continue working together as one company, and we sincerely appreciate your continued support.